This Vertical Farm Wanted to be an Agricultural Company, Not a Tech Company

FreshBox Farms is going big by focusing on harvests, not proprietary growing systems.

As the indoor farming industry has taken off in the last several years–over the next 10 years, indoor farming is expected to account for 50% of leafy green production, and grow to a $42 billion industry–it’s become apparent that it’s as much about technology as it is about agriculture. Bowery, a new startup operating out of an old warehouse building in Kearney, New Jersey, developed a sensor-based proprietary technology, called BoweryOS, specifically to support the venture by determining necessary nutrient levels, as well as when crops are ready for harvesting. And in South San Francisco, Plenty is growing produce via a tech-supported vertical farming model that has already received $26 million from tech investors like Bezos Expeditions and Innovation Endeavors.

For FreshBox Farms, an indoor farm operational since 2015 at an old factory site in Millis, Massachusetts, around 30 miles outside of Boston, the technology is important–it is, after all, what enables the greens to grow–but it’s not sacred. “We’re equipment agnostic,” Sonia Lo, the CEO of Crop One Holdings, FreshBox’s parent company, tells Fast Company. “There are people out there doing great work to perfect lights, trays, control systems, nutrient dosing systems–we focus on growing as much as possible.” This almost brusque approach, Lo says, has enabled FreshBox Farms to become one of just two commercial indoor farming ventures in the U.S. that is gross-margin positive. The other is the Newark, New Jersey-based AeroFarms, which grows up to 2 million pounds of produce per year.

Earlier this year, Matt Barnard, CEO of Plenty, told Fast Company that “small-scale growing in 2017 is not a profitable enterprise.” He was referring to the fact that indoor farming startups, which, since the boom began within the last five years, have a track record of failure. FarmedHere, a Chicago-based venture, intended to expand nationally but instead went bankrupt earlier this year, citing the difficulty of maintaining financial equilibrium. PodPonics and LocalGarden, ventures based respectively in Atlanta and Vancouver, similarly failed; the business tensions derived from the high cost of technology, and the relatively small return on investment from output and distribution. Given the hefty price tag of developing proprietary growing technologies, not to mention renting pricey urban land, underwhelming harvests (which are common among startups still tinkering with their growing systems) can be financially devastating.

“Because we’re modular, we’re not waiting for a whole farm to be built out to create revenue.”

But with the cost of technology (for instance, LED lights, sensor technology, and smartphones, all of which are necessary for indoor farming) falling, and interest in local produce continuing to increase, Lo believes FreshBox Farms has hit on a sweet spot with its growing strategy. The company spends less money growing more product than any other indoor farm in the country, and Lo attributes that to FreshBox’s approach to technology, and easily scalable farm setup.

The FreshBox model centers around shipping containers (hence the name of the farm). At the farm in Massachusetts, which currently serves 37 supermarkets in the Boston region, each of FreshBox’s 12 commercial products, whether it be kale, arugula, or chard, is grown with hydroponics in its own shipping container; the farm currently houses 15, along with one “Mod”–a modular unit equivalent to nine containers. Conditions inside each container are optimized for each product, but the network as a whole is governed and monitored by the same technology system. By growing crops in separate containers, Lo says, FreshBox can focus on optimizing yield for each product.

The modular system, Lo says, is really what has enabled FreshBox to become profitable just 23 months after launching two years ago. “Because we’re modular, we’re not waiting for a whole farm to be built out to create revenue,” Lo says. “Once we have a box or two on the ground, we’re growing.” FreshBox can have a farm up and running, and selling, within 12 weeks.

The current FreshBox Farm configuration in Massachusetts produces a quarter ton of produce per day, but Lo emphasizes that as the company continues to iterate on the technology it uses and the size of the containers themselves, that number will likely increase. Currently, FreshBox is growing the equivalent of as much as 19 acres of produce in 320 square feet; as FreshBox verticalizes further, that efficiency will grow. “Real estate is a square-foot venture,” Lo says, “But we’re dealing in cubic feet.” Meaning that once FreshBox secures a plot of land on which to operate, they can continue stacking shipping containers higher and higher, and maximizing output. The containers on the farm are not yet stacked, but that’s a next step, Lo says.

Even as other indoor farming companies struggle with expansion, Crop One Holdings has locked in nine new locations for the next generation of FreshBox Farms. The majority will be in the northeast, and, like the Millis farm, located outside the urban center to cut down on property rental costs. And the focus, Lo says, will remain on productivity and profit–not necessarily for profits sake, but to ensure that fresh produce can become more available. “There are a ton of urban farmers out there who are talking about how they’re on the cutting edge of technology and measuring 20,000 data points,” Lo says. “But we’ve never fallen in love with the science. We’re all about: What is the yield? Are we actually growing things? Are we selling every leaf?”

Over the next five years, FreshBox is aiming to reach 25 farms across the U.S., each of which will produce between one and three tons of produce per day. The company will continue to iterate and switch out technology as it grows, and as more efficient systems become available. “I don’t think you should be in this industry unless you’re planning to be big,” Lo says.